BIZStrat Leverage Ratios
BIZStrat STRATEGIC MANAGEMENT
Financial analysis ratios, leverage ratios

Leverage ratios

Includes:

Debt to assets
Debt to equity
Times-covered ratio

Debt to assets

The extent to which borrowed funds have been used to finance investments. If a firm's ratio is higher than the industry average, it may find difficulty in borrowing additional funds.

Debt-to-assets ratio = Total Debt/Total Assets

Debt to equity

A firm's balance of debt and equity

Debt-to-equity ratio = Total Debt/Total Equity

Times-covered

The extent to which gross profit covers annual interest payments

Times-covered ratio = Profit Before Interest and Tax/Total Interest Charges

Copyright © Marilyn Shaw and Merri Incitti

This page last updated November 1995

Shareholder-return ratios

Main financial analysis ratios page

Chapter 2 summary

Top of page

Home